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Olin (OLN) Up 13.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Olin (OLN - Free Report) . Shares have added about 13.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Olin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Olin Beats Earnings and Revenue Estimates in Q1

Olin posted a profit of $243.6 million or $1.51 per share in first-quarter 2021 against a loss of $80 million or 51 cents per share in the year-ago quarter.

Excluding one-time items, adjusted earnings for the quarter were $1.53 per share, that beat the Zacks Consensus Estimate of $1.34.

The chemical maker’s revenues rallied roughly 35% year over year to $1,918.8 million in the quarter. It also surpassed the Zacks Consensus Estimate of $1,891.1 million. The company saw higher sales across its segments in the first quarter. It benefited from higher pricing in the quarter.

Segment Review

Chlor Alkali Products and Vinyls: Revenues in the division rose roughly 14% year over year to $867 million in the reported quarter as lower volumes were more than offset by higher pricing, specifically ethylene dichloride, chlorine, and chlorinated organics. Lower operating costs also contributed to the segment’s earnings.

Epoxy: Revenues in the division went up around 38.9% year over year to $662.6 million on higher prices.

Winchester: Revenues more than doubled year over year to $389.2 million on increased commercial and military sales as well as higher commercial ammunition pricing.

Financials

Olin ended the first quarter with cash and cash equivalents of $259.9 million, up roughly 34% year over year. Long-term debt was $3,706 million at the end of the quarter, up around 6.2% year over year.

Outlook

Olin expects adjusted EBITDA for 2021 to be between $1.8 billion and $2.1 billion.

The company expects its recent price hike announcements for chlorine, epichlorohydrin, epoxy resins, bleach, ethylene dichloride, caustic soda and chlorinated organics to favorably contribute to its Chemicals businesses in the second quarter. The company envisions some volume offsets as it is selectively selling less into poor-quality markets. It also anticipates higher maintenance costs and unabsorbed fixed manufacturing costs of roughly $40 million related with planned Epoxy maintenance turnarounds in the second quarter.

Second-quarter adjusted EBITDA is projected to improve sequentially from first-quarter 2021 levels barring the net one-time financial benefits from Winter Storm Uri.



 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 41.62% due to these changes.

VGM Scores

Currently, Olin has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Olin has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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